Today’s lending market looks very different than it did even just a handful of years ago. More customers are checking auto prices and lending rates online to find the financing companies that offer the best deals. The result: An ultra-transparent and aggressively competitive market.
Lenders have long relied heavily on scores from the big three credit bureaus. However, the bureaus have recognized that alternative credit data improves lending decision quality and reveals new lending opportunities.
Business process automation (BPA) replaces inconsistently-executed manual activities with consistently-executed workflows and decisions. The result for financial services providers: Lower processing costs. Banks evaluating business process automation companies should look for the following capabilities to improve lending efficiency.
The best LOS systems calculate alternative credit scores for each loan type offered. To start collecting alternative credit data on your own applicants, you’ll need to work with an LOS vendor that understands the importance of alternative credit data and has experience building reliable scoring systems.
According to the New York Fed, US subprime loans are going delinquent at rates unseen since the Great Recession. Auto loan delinquencies 90 or greater days past due increased 47 basis points year-over-year to 4.64% ($60.2 billion) of all outstanding auto loans and leases in Q2, 2019. That’s baffling, considering the comparatively strong economic climate, record low unemployment, and many unfilled job openings.
According to the American Bankers Association, only half of large banks and 38% of small banks currently use an online or digital loan origination channel. Commercial lending software makes it easy to quickly calculate loan periods, track collateral, and estimate cash flow.
The millions of people born in the US sometime between the early 1980s and mid-1990s now outnumber baby boomers. For banks, this is a massive opportunity. However, they need to understand the group’s mindset and adapt their lending technology to take advantage of millennial banking trends.
Big data has transformed businesses in every industry. Banks now use data acquired from nearly every step of the loan origination process. The reward: Detailed insight that can be applied to continuously improve lending efficiency and profitability.
Business process automation has helped the banking industry bring efficiency to high-volume processes. It brings speed and accuracy to account openings and closures, credit card applications, and loan originations. Recent fintech innovations are transforming the loan origination process with lower processing costs, better quality, and consistency in lending decisions—and lower risk.
It’s an exciting time to be in the lending industry. Major technological advances in loan origination system software have made it easier than ever to process loan applications and automate decisioning. Computers are now doing most of the tedious work, saving organizations hours of potentially wasted time and countless resources.